Los Angeles daily herald., 1887-03-14
THE CLEARINGHOUSE.
How 1t will Benefit the
Various Banks.
BALANCES AND EXCHANGES.
Possibility of the Establishment OF
Such an Institution i'll
Los Angeles.


There is an axiom, ''never put OH
until TO. morrow what can be done To-
day." which applies to the moneyeo
institutions of Los Angeles. There Is
need for the establishment OF clearing
house in this city, and according to the
above rule the matter should not be
delayed any longer than eau be Helped
Some inquiry has already been MADE
hv tho Board of Trade relative to this
matter and it is only necessary to look
into the history OF similar institutions
In o,hsr cities aud to consider the
heuefits derived therefrom to convince
m interested that q clearing. house Is
rscessity. Almost every city OF any
size and Of any pretensions to CONNER
cal activity, and all cities which are
railroad and shipping centers, have long
heeu possessed of like institutions, ana
n the present day it is considered an
Indispensable part of the banking bust.
ness. Los Angeles has some eight or
nine commercial and mercantile banks,
and while they do not have such
volume of business as similar institu'
tions in older cities, they certainly have
enough to warrant them in supporting
: caring house, and the time is COM
ing when the settlement OF their daily
balances will be q much more arduous
task than it is at present If this sysrem
Of clearings is not adopted.
A NECESSITY FOR BANKS.
Besides tine necessity to banks of such
an institution the record Of exchanges
and balances is sure index of the busi-
meas situation at different times. As it
~ at present no cns can correctly tell
wasth, + any partie e"lar year or month has
been active in commercial matters or
the reverse; and if they could get an
idea of the situation there can be found
NO data from which the particular
c,use of activity or inactivity can be
based. Thu, when the hgur's OIL 'he
San Francisco clearing. aousa nrc
it is observed that In 1886
there was an increaae in the clearings in
those of the third Quarter, which, by re.
ferring to sorts Of commercial institu'
.tions. ;. found to have been caused by
-etiye grain operations, and in the tourtn
quarter ths great increase was due to
two cause.-the grain transactions and
the increased business in stocks. While
i; might have been surmised that there
wa. an increased business in the banks
from the causes Aforementioned, such
fact could not have been definitely ascer'
tanned without the clearinghouse fig
ures. The history of the clearing house
in San Francisco is one that can be taker
n M example.
BUSINESS TRANSACTIONS.
The record of business transaction
between banks is much smaller in Sar
Francisco, when compared with New
York or Chicago, than will be those o
Los Angeles when compared with Sal
Francisco, and with the activity of thu
real estate market here there will Ger
tAinly be as large record as ther
was in San Francisco when the clearing
house first started.
Previous to 1876 balances betweel
banks were arranged TO the inconve nj
ence of clerks and bankers in San Fran
cisco, much as is the case here to-day
but following the example set by olde
cities east of the Rockies, clearing
house was established and the record a
the close of tue year showed that bal
ances aggregatiug $l04 ,S04. 707 "a had
been paid over the counters to banks,
and that the clearings amounted tc
$476. l23, 23797. BY following the
record down year by year it was demon
strated that there was increasing activity
in business during 1877 and 1878. Then
in 1879 there came dull year, and 1850
was still worse; but in 1881 and 1882
business picked up. only to fall off again
in 1888 and 1884. A slight increase
was noted in 1885 and lSS6--was some.
thing over the average. The fact that
the increase was not larger in the last
few years was because there was de-
crease in the value of commodities, and
therefore the clearings were not proper
tiOnate to the increase of the popula'
ton.
The object of clearing. house, in
definite terms, is to effect at one place
the daily exchanges between the several
banks, and TO receive and pay at the
same place the balances resulting from
such exchanges.
RULES ELSEWHERE.
Ae tne clear1ng.nOuse In oan co
the hours for making snch exchanges
are 10 o'clock A. NJ. and P. M, and at
2:30 the debtor banks pay to the man.
ager of the clearing. house, in gold coin
OF clearinghouse certificates, the bal
and due from them respectively, result
ing from the days exchanges. At
O'Clock the creditor banks receive from
the manager at the same place the bal
nnce due to them respectively. The
clearing house receives gold coin in
sealed sacks containg $4,000, $4,000 and
go, 900, each bag being tagged and
dated by the bank delivering it. Upon
its receipt it is weighed by the manager
and rejected if light, and if reclamation
is msue it AInust be demanded of the
hank whose tag has been placed on the
defective sack. At the present time
there are only sixteen banks connected
with the clearing house in San Fran
cisco and as there are nearly as many
banks in this city, it seems clear tina
there is enough business between then
to warrant the formation of a clearing
house. As has been stated, inquiries
relative to clearing. houses are beinl
made and it is within the possibilities
that one may be established here in tht
near future.
An Editor tn Luck.